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Daily Pivots: (S1) 154.63; (P) 154.76; (R1) 154.95; More...

Intraday bias in USD/JPY stays mildly on the upside for further rally. However, considering bearish divergence condition in 4H MACD, strong resistance should be seen from 155.20 fibonacci level to bring correction on first attempt. On the downside, break of 153.58 support will turn bias to the downside, for deeper pull back to 55 D EMA (now at 151.11).

In the bigger picture, current rise from 140.25 is seen as the third leg of the up trend from 127.20 (2023 low). Next target is 61.8% projection of 127.20 to 151.89 from 140.25 at 155.20. Outlook will remain bullish as long as 146.47 support holds, even in case of deep pullback.

Daily Pivots: (S1) 0.9093; (P) 0.9113; (R1) 0.9138; More....

No change in USD/CHF's outlook as consolidation form 0.9151 is extending. Intraday bias remains neutral for the moment. Further rally is expected as long as 0.8996 support holds. Break of 0.9151 will resume the larger rise from 0.8332 to 0.9243 resistance. However, firm break of 0.8996 will turn bias to the downside for 55 D EMA (now at 0.8953).

In the bigger picture, price actions from 0.8332 medium term bottom as tentatively seen as developing into a corrective pattern to the down trend from 1.0146 (2022 high). Further rise would be seen as long as 0.8728 support holds. But upside should be limited by 0.9243 resistance, at least on first attempt. However, decisive break of 0.9243 will argue that the trend has already reversed and turn medium term outlook bullish.

Daily Pivots: (S1) 1.3640; (P) 1.3679; (R1) 1.3701; More...

Intraday bias in USD/CAD remains neutral for the moment with focus on 1.3660 support. Strong rebound from current level will retain near term bullishness. Break of 1.3748 minor resistance will turn intraday bias back to the upside for retesting 1.3845 resistance. However, sustained break of 1.3660 will bring deeper fall to 55 D EMA (now at 1.3592) instead.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern only. In case of another fall, strong support should emerge above 1.2947 resistance turned support to bring rebound. Firm break of 1.3976 will confirm up resumption of whole up trend from 1.2005 (2021 low). Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3176 at 1.4149.

Daily Pivots: (S1) 0.6455; (P) 0.6473; (R1) 0.6504; More...

AUD/USD's strong break of 0.6480 support turned resistance confirms short term bottoming at 0.6361, and intraday bias is back on the upside. Sustained break of 55 D EMA (now at 0.6527) will bring further rally to 0.6643 resistance next. On the downside, though, break of 0.6440 minor support will indicate rejection by 55 D EMA and retain near term bearishness. Retest of 0.6361 low should be seen next.

In the bigger picture, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern to the down trend from 0.8006 (2021 high). Fall from 0.7156 (2023 high) is seen as the second leg, which is still in progress. Overall, sideway trading could continue in range of 0.6169/7156 for some more time. But as long as 0.7156 holds, an eventual downside breakout would be mildly in favor.

Australian Dollar is having a robust, broad-based rally today, boosted by unexpectedly strong CPI data. This inflation report is particularly notable given the unexpected reacceleration in monthly CPI in March, which contributed to the quarterly figure not slowing as much as anticipated. Meanwhile, both services and domestic inflation remain elevated. The set of data is unlikely to alter RBA's "not ruling anything in or out" stance at the upcoming meeting in May. The timing of the first rate cut is now pushed further to the end of the year, and there is even possibility that the next move is a rate hike.

Overall in the currency markets, New Zealand Dollar and Sterling also strengthened as the second and third strongest for the day, benefiting from improved risk sentiment this week. This uplift in market mood has sparked questions about whether the correction in global stocks observed this month has run its course, a key point of focus for the coming days.

Conversely, Canadian Dollar is currently the weakest performer today, with market participants awaiting BoC summary of deliberations. There is speculation that BoC may commence a policy easing cycle as early as June, although it is expected to be a finely balanced decision. Investors are keenly awaiting the meeting minutes for further clues on the discussion among board members.

Meanwhile, Yen and Dollar are the next weakest, reflective of the prevailing risk-on market sentiment. Euro and Swiss Franc are currently positioned in the middle of the performance chart.

Technically, DOW's break of 38483.25 resistance argues that fall from 39899.05 has completed at 37611.56, ahead of 38.2% retracement of 32327.20 to 39899.05 at 37000.42. Rebound from there is now seen as the second leg of the corrective pattern from 39899.05. Sustained trading above 55 D EMA (now at 38461.65) will strengthen this case and bring stronger rally back towards 39889.05 high.

In Asia, at the time of writing, Nikkei is up 2.33%. Hong Kong HSI is up 1.99%. China Shanghai SSE is up 0.36%. Singapore Strait Times is up 0.98%. Japan 10-year JGB yield is up 0.0035 at 0.890. Overnight, DOW rose 0.69%. S&P 500 rose 1.20%. NASDAQ rose 1.59%. 10-year yield fell -0.025 to 4.598.

Australia CPI slows less than expected in Q1, accelerates in Mar

In Q1, Australia's CPI slowed from 4.1% yoy to 3.6% yoy, exceeding market expectations of 3.4% yoy. Similarly, trimmed mean CPI, which excludes volatile price items and provides a clearer view of underlying inflation trends, also decelerated less than expected, moving from 4.2% yoy to 4.0% yoy, against predictions of 3.8% yoy.

The breakdown by category shows a general slowdown across the board. Goods inflation decreased from 3.8% yoy to 3.1% yoy, while services inflation eased from 4.6% yoy to 4.3% yoy. Tradeable inflation, which includes items that can be imported or exported, slowed more significantly from 1.5% yoy to 0.9% yoy. Non-tradeable inflation, representing goods and services not exposed to international markets, also saw a reduction from 5.4% yoy to 5.0% yoy.

However, on a quarterly basis, CPI rose by 1.0% qoq in Q1, marking an acceleration from the previous quarter's 0.6% qoq and outpacing expectations of a 0.8% rise. This quarterly increase suggests that, despite the annual slowdown, price pressures within the economy intensified at the start of the year. Trimmed mean CPI on a quarterly basis mirrored this trend, rising 1.0% qoq compared to the previous 0.8% qoq, also surpassing the expected 0.8% qoq.

Monthly figures reinforce the notion of persistent inflationary pressures, with CPI ticking up from 3.4% yoy to 3.5% yoy, again exceeding expectations.

New Zealand's goods exports rises 3.8% yoy in Mar, imports fell -25% yoy

New Zealand's goods exports rose 3.8% yoy to NZD 6.5B in March. Goods imports fell -25% yoy to NZD 5.9B. Monthly trade balance was a surplus of NZD 588m, versus expectation of NZD -505m deficit.

Exports to US and EU showed increases of 8.0% yoy and 3.6% yoy respectively. However, exports to major trading partners like China (-1.9% yoy), Australia (-3.7% yoy), and Japan (-15% yoy) declined.

On the import side, there were significant reductions across all major partners. Imports from EU saw the sharpest decline at -43% yoy, followed closely by US at -42% yoy. Imports from China, Australia, and South Korea were down -20% yoy, -13% yoy, and -21% yoy respectively.

Looking ahead

Swiss Credit Suisse eocnomic expetations and German Ifo business climate will be released in European session. US durable goods orders will be released later in US session. Canada will release retail sales and BoC summary of deliberations.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6455; (P) 0.6473; (R1) 0.6504; More...

AUD/USD's strong break of 0.6480 support turned resistance confirms short term bottoming at 0.6361, and intraday bias is back on the upside. Sustained break of 55 D EMA (now at 0.6527) will bring further rally to 0.6643 resistance next. On the downside, though, break of 0.6440 minor support will indicate rejection by 55 D EMA and retain near term bearishness. Retest of 0.6361 low should be seen next.

In the bigger picture, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern to the down trend from 0.8006 (2021 high). Fall from 0.7156 (2023 high) is seen as the second leg, which is still in progress. Overall, sideway trading could continue in range of 0.6169/7156 for some more time. But as long as 0.7156 holds, an eventual downside breakout would be mildly in favor.

Economic Indicators Update

Key Highlights

• GBP/USD is recovering higher from the 1.2300 support.
• It broke a connecting bearish trend line with resistance at 1.2420 on the 4-hour chart.
• EUR/USD is consolidating and aiming for a move above 1.0750.
• Crude oil prices found support near the $81.50 zone.

GBP/USD Technical Analysis

The British Pound extended losses and traded below the 1.2450 support against the US Dollar. GBP/USD tested the 1.2300 zone and recently started a recovery wave.

Looking at the 4-hour chart, the pair traded as low as 1.2299 and settled well below the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

It is now recovering higher above 1.2380. GBP/USD surpassed the 23.6% Fib retracement level of the downward move from the 1.2708 swing high to the 1.2299 low. It also broke a connecting bearish trend line with resistance at 1.2420 on the same chart.

Immediate resistance is near the 1.2450 level. The first key resistance is near the 1.2500 zone. It is close to the 50% Fib retracement level of the downward move from the 1.2708 swing high to the 1.2299 low and the 100 simple moving average (red, 4-hour).

A clear move above the 1.2500 resistance could send the pair further higher. In the stated case, GBP/USD bulls could even aim for a move toward 1.2650.

Immediate support is near the 1.2400 level. The next major support is at 1.2380. If there is a downside break below the 1.2380 support, the pair might test 1.2350. The main support is now forming at 1.2300. Any more losses might send the pair toward 1.2120.

Looking at Oil, the price extended losses before it found support near $81.50 and recently started an upside correction.

Economic Releases

• US Durable Goods Orders for March 2024 – Forecast +1.5% versus +1.4% previous.
• US Durable Goods Orders ex Defense for March 2024 – Forecast +2.5% versus +2.2% previous.

Inflation was a bit higher than expected in the March quarter. It is declining, but it has a way to go for the RBA to be confident of returning to the 2–3% target range on the desired timetable. We expect the Board to keep rates on hold in May, and have pushed out the date of the first rate cut to November this year, previously September.

Inflation continued to unwind in the March quarter, but not quite as much as expected. Headline CPI and the key trimmed mean measure both printed at 1.0% in the quarter, against Westpac Economics’ expectation of 0.8% for both measures.

This brings headline inflation on a year-ended basis firmly into the 3s, in striking distance of the RBA’s 2–3% target range, but the key trimmed mean measure is still at 4%. The RBA does not publish a full quarterly profile for its inflation forecasts. However, based on its view for the year-ended to June quarter (3.3% year-ended for headline and 3.6% for trimmed mean), we assess today’s release as implying a somewhat slower trajectory of disinflation than the RBA would like. The RBA might also be sensitive to the lack of progress in disinflation through the March quarter evidenced in the monthly indicator.

Today’s release continues the general pattern of unwinding upstream pressures and soft domestic demand driving some parts of the inflation basket lower. Tradables inflation is back to pre-pandemic norms. Services inflation declined, but remains high. The overall shape of the outcome was qualitatively similar to our expectations, but there were a range of upside surprises in the detail.

The biggest surprises were not in areas that would suggest that inflation is being driven by strong demand. Car prices were up unexpectedly, consistent with the renewed increase in delivery times. Pharmaceutical prices and insurance costs are also not suggesting an inflation driven by consumer demand.

The main other upside surprise in the recent data flow has been the labour market, where unemployment has stayed a bit lower, and employment growth a bit stronger than earlier expected. While the Board is watching labour market developments closely, it is not trying to achieve the required disinflation primarily by weakening the labour market. Labour costs are elevated but they are not the main driver of the inflation surge.

Accordingly, we assess that the RBA will keep rates steady at its upcoming meeting. It will probably continue to be cautious about services inflation and domestic pressures broadly for a few months yet. We therefore do not expect any change to the messaging about not ruling anything in or out for another few months.

Given the slower progress on disinflation this quarter and the lower starting point for labour market slack, we now expect the first rate cut to occur after the November meeting, rather than September as previously expected. As always, this view is data-dependent and there are risks on both sides of a November timing.

In Q1, Australia's CPI slowed from 4.1% yoy to 3.6% yoy, exceeding market expectations of 3.4% yoy. Similarly, trimmed mean CPI, which excludes volatile price items and provides a clearer view of underlying inflation trends, also decelerated less than expected, moving from 4.2% yoy to 4.0% yoy, against predictions of 3.8% yoy.

The breakdown by category shows a general slowdown across the board. Goods inflation decreased from 3.8% yoy to 3.1% yoy, while services inflation eased from 4.6% yoy to 4.3% yoy. Tradeable inflation, which includes items that can be imported or exported, slowed more significantly from 1.5% yoy to 0.9% yoy. Non-tradeable inflation, representing goods and services not exposed to international markets, also saw a reduction from 5.4% yoy to 5.0% yoy.

However, on a quarterly basis, CPI rose by 1.0% qoq in Q1, marking an acceleration from the previous quarter's 0.6% qoq and outpacing expectations of a 0.8% rise. This quarterly increase suggests that, despite the annual slowdown, price pressures within the economy intensified at the start of the year. Trimmed mean CPI on a quarterly basis mirrored this trend, rising 1.0% qoq compared to the previous 0.8% qoq, also surpassing the expected 0.8% qoq.

Monthly figures reinforce the notion of persistent inflationary pressures, with CPI ticking up from 3.4% yoy to 3.5% yoy, again exceeding expectations.

Full Australia CPI release here.

New Zealand's goods exports rose 3.8% yoy to NZD 6.5B in March. Goods imports fell -25% yoy to NZD 5.9B. Monthly trade balance was a surplus of NZD 588m, versus expectation of NZD -505m deficit.

Exports to US and EU showed increases of 8.0% yoy and 3.6% yoy respectively. However, exports to major trading partners like China (-1.9% yoy), Australia (-3.7% yoy), and Japan (-15% yoy) declined.

On the import side, there were significant reductions across all major partners. Imports from EU saw the sharpest decline at -43% yoy, followed closely by US at -42% yoy. Imports from China, Australia, and South Korea were down -20% yoy, -13% yoy, and -21% yoy respectively.

Full New Zealand trade balance release here.

• WTI crude oil reversed from support zone
• Likely to rise to resistance level 86.00

WTI crude oil recently reversed up from the support zone lying between the round support level 80.00 (low of wave (iv) from March), lower daily Bollinger Band and the 38.2% Fibonacci correction of the upward impulse from February.

The upward reversal from the support level 80.00 stopped the previous ABC correction (4) – forming the daily Hammer.

Give the strength of the support level 80.00, WTI crude oil can be expected to rise further to the next resistance level 86.00 (which stopped waves (3) and B).